Would a Universal Basic Income Help Global Poverty?
Valentina Korte
Would a Universal Basic Income Help Global Poverty?
Universal Basic Income is a government program in which every adult citizen receives a set amount of money monthly with the ultimate goal of eliminating poverty and replacing social welfare programs that require greater investments and bureaucratic involvement. The money collected would most likely come from tax reforms and cuts of welfare programs. Some say that a universal basic income is fisable and would help improve health and education among others; however I would argue that the engines behind implementing an UBI are nearly impossible because of the negative consequences of cutting social welfare programs and implementing a tax reform. A better solution would be to implement financial assistance to the households with the lowest economic strata and maintain, if not increase, social welfare programs.
Social welfare programs include health care, food stamps, unemployment compensation among many others which have been crucial for the survival of many families; the problem is that in order to economically support the implementation of UBI’s these programs would have to be cut, which I argue is not worth it. Some would argue that UBI’s could not only successfully replace but also be better than welfare programs because giving citizens an extra $1000 dollars a month would allow them to buy sufficient food, have access to hygiene products and healthcare. In addition, it would require less investments and bureaucratic involvement as well as giving an extra income they could contribute more to the overall economy. I grew up in Brazil, where Bolsa Familia — Brazil’s basic income program — and Seguro Desemprego — unemployment compensation — were very permanent. Their ultimate goal was to help the poorest families and ensure that the kids were healthy and attending school. At first it worked super well, however with time many families became too comfortable and dependent, they stopped working and started having more kids as it was more profitable. In 2010, 25% of Brazilian families were dependent on it, which eventually led to higher rates of unemployment and a growing population. This makes me believe that if we do implement an UBI many citizens will stop working. Throughout highschool I had the opportunity to live in France, where I better understood their mentality towards work: the less the better. Which again makes me believe that unemployment would increase. All in all, I believe that UBI’s would lead to unemployment and therefore not help grow the economy.
Furthermore, I also believe that even if UBI’s could be successfully implemented, social welfare programs are more beneficial to us. When offering good quality education, you get less economic gaps, increase learning and graduation rates which eventually will contribute to major economic growth. Investments in healthcare allows citizens to not have to worry as much about their health bills, in America nearly 18% of citizens hold large amounts of medical debt, being able to reduce that would be extremely beneficial. The $1000 a month would not be nearly enough if citizens got sick or needed medical help. I believe that cutting such programs would lead to chaos and uncertainty, not to mention how it would be very hard to implement it in terms of the economy behind it.
Another way to make the implementation of UBI feasible would have to be through tax reforms. Many have suggested taxing automation companies that are predicted to eliminate half of U.S jobs and taxing the upper economic class. When looking to tax a lot of tech companies it can often lead to a lot of these companies leaving and going to settle in the Bahamas, Monaco or the UAE where there are no taxes and looser policies. The same goes for ‘taxing the rich’, this can be seen, over the past few years thousands of millionaires relocated to florida from the rest of the United States because of low taxes. Similarly, at the beginning of the year companies such as Microsoft, Elliott Management and Baker McKenzie were all looking to relocate to florida. Additionally, according to the Corporate Finance Institute “ The rise in the price level signifies that the currency in a given economy loses purchasing power, then the cost of living continues to increase” meaning that UBI’s would eventually lead to inflation. Since businesses would be aware that now citizens have more to spend, they are likely to increase the price of rent, food and goods in general. I believe that it would be nearly impossible to raise money through taxation, leaving the one option of cutting social welfare programs. As previously stated, I do not believe that UBI’s and social welfare programs can coexist because of their price. In the United States just under 30% of the total GDP goes to welfare programs alone which is equivalent to 6.3 trillion dollars and to give all American adults 1,000 a month would cost 3 trillion dollars a year. It is too costly to implement UBI’s without taxiing and cutting programs, which I argue is not worth it and would eventually lead to inflation.
On the other hand many people believe the opposite, they think that a Universal Basic Income would be more beneficial than welfare programs as it would help provide all citizens with basic human rights, improve quality of life and would lead into economic growth. In many developing countries many programs do not work efficiently, families don’t have disposable income to contribute to the economy, and those offered are nowhere near sufficient to help tackle those battling poverty. As mentioned, I believe that UBI’s could potentially slow down the economy, however there are some studies that show the opposite: if Yang’s program was financed by the government debt it would generate about $2.5 trillion in economic growth by 2025, increase employment by 2% and add around 4.6 million jobs; if it was founded through progressive income taxes it would generate $515 billion and create around 1.1 million jobs. Showing how UBI’s would provide citizens with stability while simultaneously growing the economy, which in the long run would be the most important in my opinion because if you have a growing economy you have a better quality of life. There are more examples of how UBI’s would contribute which include increasing entrepreneurship which in the long run would generate economic growth, decrease in crime rates — in Brazil for example for every 1% that unemployment rises there is an increase of 1.8% in homicide rates — and an increase in education as kids would be able to stay in school for longer instead of having to work to help help support their families from a young age. All these would lead to a more safe and better lifestyle for many eventually contributing to economic growth.
Furthermore, many argue that UBI’s would also help tackle immediate poverty. Over 34 million people are currently living under the poverty line which has led to malnourishment, increasing crime rates, homelesness, stress and growing illiteracy. According to many articles including the Economist Observatory claim that UBI’s would immediately end poverty, since everyone would receive sufficient money to live a decent life. Additionally many argue that many companies would not relocate despite there being tax reforms. 60 of America’s biggest companies had paid no federal taxes, so if they don’t leave and we start taxing them the government would have more than enough money to implement UBI without compromising social welfare programs. Growing up in a developing country I have seen the struggles of many families and understand how even a small amount of money can completely change their lives and I want to see positive change worldwide. All in all, they argue that UBI can be implemented through tax reforms and cuts of welfare programs with no problem, that it will lead to economic growth and it will be better than welfare programs.
Despite understanding all these counter arguments I am still not convinced that it would be even possible to implementan UBI. I am not arguing that an UBI would not help tackle poverty and increase quality of life, I’m arguing that the logistics behind it do not work. Firstly, despite them believing it would help increase the economy and lead to job growth, in many European countries and developing countries a monthly allowance led to an increase in unemployment. The same can be said for taxing companies and individuals, despite some research stating that companies would not relocate, there are many patterns that indicate the complete opposite. Lastly, many of the articles that I read that argued UBI’s could be implemented did not take into consideration that for developing nations — which is where citizens need this assistance the most — it would be extremely difficult to raise this kind of money especially since they don’t have many large corporations. All in all, as mentioned I do not believe UBI’s can be successfully implemented.
In conclusion, I believe that instead of introducing an UBI, we should work together as a united globe to implement better welfare programs in developing nations and assist the families in more urgent matters as well as introducing programs to tackle those in extreme poverty. Together we can still tax large corporations, invest in healthcare and education which will eventually lead to a more stable economy and world.
